Family, Home Buying, Investing, Must Have Documents, Relationships, Saving, Trust, Will
September 09, 2021
Listen to Podcast Episode:
On this podcast of Ask Suze (and KT) Anything, Suze answers questions from Women & Money listeners Jill, Christine, Leslie, Gina, Jasmine, Marlena and Pamela selected and read by KT.
Jill - My parents are bad with money, and I'm worried at the end that the debt they have won't allow us to cover funeral expenses. What should we do?
Christine - Is it risky to put most of our savings into only one fund?
Leslie - Should my husband and I buy a smaller house for when we are ready to downsize?
Gina - Is my boyfriend ever going to get control of his finances?
Jasmine - How can we save for my parents, with the best return on their money?
Marlena - How should my husband and I take the title to our home during our refinance and working on our Must Have Documents?
Pamela - Do I need to make a living revocable trust, I updated my will and my lawyer said that was enough?
Good morning Suze, do you know what today is? I do know what today is? September 9th, 2021, I know and I know that you KT want me to say what it is but you know how I would answer this question. Yes, I know, I would say it's the day after our anniversary. Did you love? And everybody, she's still in a great mood. We had a fabulous, fabulous anniversary. Fabulous day but, but today is the birthday, want to hear something weird. We Have two nieces, Lauren and Katie who were born four years apart on September 9th the same day and I believe within the same hour, exact hour minute, everything exact second which is so strange. Can you believe it, four years apart? I would expect that because they are the nieces are the daughter of my twin sister. So, what, what why would you have like twins? But four years apart I think it's a little late on the right think about it. But we want to wish Lauren and Katie a fabulous, fabulous celebration. We know you're having a lot of fun together and we just can't wait to hear all about it. And I sent them two key lime pies, their favorite, we make presents. So, I made two key lime pies. What did I make, a phone call saying Happy birthday, right? That's what I'm gonna make anyway. Ready soon. Wait you know what else? September 9th is at one PM. Today East coast time. September 9th, 2021. Remember at 1:00 is the long-term care webinar by Phyllis Shelton. You can register for free at buddyins.com, buddy insurance, and registered there and there you go. Alright. Ready. Suze. First question is from Jill and it was funny when I read this it said I'm pretty talkative so I'm going to try to keep it short but will also give you additional info. So, I want to tell everyone Jill wrote she's very funny. She wrote short version of her situation and the long version. KT absolutely chose the short version which is still pretty long. So, here it goes. My dad and step mom are terrible with money. I have given them $15,000 throughout the years to try to make sure they don't lose their home and could pay some bills. They have zero money in the bank, no life insurance and their only asset is their house. It's worth 293,000 and they still owe about 7 or 8,000 on it. However, they also oh the I.R.S. over $30,000. That's not good. They never declared bankruptcy. Never set up a payment plan. And now the I. R. S. Is garnishing part of their social security. I'm worried that when they die all of their debtors will seize whatever the house is worth, and we will have nothing for funeral expenses. So, Jill here's the thing you have to understand that there is a very big difference between the I.R.S. and the federal government being the person coming after you or the entity and a creditor like a car loan company or even a mortgage company whatever it may be. So, there's a big difference between the two now you did not say in the short version anyway. And I see that the long version is four pages. So, there you go on that one. But anyway, four pages. Look at this. Right, so is that you don't say in the short version that they owe money to anybody else other than the I.R.S. so, here's what you need to understand. Okay your parents die and now they're no longer around. Their Social Security check isn't around at all. And maybe they still owe money to the I.R.S. The I.R.S. Immediately I can tell you this immediately will slap a lien on their home and when you go to sell it, if you go to sell it, that lien has to be paid first before you can sell it. Now here is what is important for you to know, a lien that is automatically able to be put on by the I.R.S. and it is. Can only be held for 10 years from the date that the I.R.S. assessed the fact that your parents owed tax. All right so I don't know how long they've been having their social security check garnished. Has it been two years? Three years? Four years. Did it just start? But once 10 years goes by and then, listen to me closely. Your parents die and the I.R.S. maybe puts a lien on their home. You're going to have to apply to have the lien removed as soon as the statue of limitations has passed, which is 10 years. So, number one, just remember that. For any other debtor if anybody else is owed money by your parents to get a lean to get that money they have to go to court. They have to sue and they have to win a judgment where the judge actually says yes you can put a lien on the property. Maybe some lenders will go through all that trouble and make money will just write it off and say it's over their dead. So, you just have to see what happens. But either way stop being so afraid here. You have a home that they're living in that's worth in $293,000, upon their death. There will be some money there at least to you know have them cremated, or do whatever you want. But do not be worried that other than the I.R.S. or the federal government, that anybody can just come and slap a lien and take all of the money away. Got that? It's actually very complicated, KT. Okay. I hope that helps you, Jill. Ready, Suze. Alright. I'm reading an article from NBC about a mutual fund called Infiniti Q. That has collapsed. I have most of my savings in the Vanguard Wellington fund. Is it risky to put most savings into one fund? This troubles me because I thought that mutual funds were already diversified. Can you please explain what the average investor can do or what they should know to protect themselves when choosing funds? Good question, what is this person’s name? Christine, Christine. It is true. There was and possibly still will be a mutual fund by the name of Infiniti Q. And they totally collapsed because the stocks and the investments within the portfolio according to some people were not being valued correctly. So, they came in and they did all kinds of things. And so right now everything is done and you if you have money in Infiniti Q, you cannot get the money out. So, it's just a big bummer that that happened. However, not unpredictable, if you had looked at the holdings of what Infiniti Q was doing and what they held within the mutual fund, you probably would not have invested in it. But so many people because people with big money went into that fund, other people were like, well, so and so did it. So maybe I should do it. They're returning about 9.5% a year on money, which actually isn't as good as what did go on in the actual stock market. But that's besides the point. And so, you have the Vanguard Wellington fund, which is an incredible mutual fund. Look at the stocks that Wellington owns and they're every day names, names that you have heard, investments that are traded on the New York stock exchange and so on and so forth. So, you're fine. But Infiniti Q was made up of many very unusual and speculative investments and that's what happened to them. A lot of people got caught in it because they didn't understand what they were investing in. So yeah, mutual funds can absolutely totally go down and be in big trouble, but not if they're invested in really great quality stocks. Did that explain it, KT? Because this Was such a complicated story. Do you know that company? Well, the reason I'm so mad at this company, you sound really mad. Well, I am because they're withholding $750,000 of the investor's money to pay their own legal bills. So, that means the investors are going to have to pay the legal defense of this company that really did screw them. And so, it's just yeah, so I'm mad at them. Yeah, see there you go. Alright. The next question is from Leslie, Hi Suze. Thanks for all you do for us. I have a question about purchasing a property that we can also downsize to when it's time. My husband and I are 64 and 62 respectively and are in relatively good health. We have a home worth $300,000 with $80,000 remaining on the mortgage at 2.78%. Our monthly payments with taxes and insurance are about $950, in 10 years or when one of us passes, we plan to downsize. So, they have two businesses they currently run out of the home. The husband teaches music to about 50 students a week and Leslie publishes books, together we gross about $60,000 a year. They gross. They gross about $60,000 a year. So, we have about $5,000 of credit card debt. We have about $7,500 in savings and about $100,000 in a traditional IRA, 94% stocks. And then she has this part, I don't like Suze, Leslie has a student loan debt with about $50,000 dollars. So, I have this right, that they want to sell the home. No that they don't want to sell it yet. They just want to buy. Oh denied. Yeah, they want to buy a small property. Denied, hold on let me tell you the rest, it’s so denied. It's not even funny. They want to buy this for $125,000 from a family member and they want to use this home, this little home on property to expand their business. Then later when they're ready, sell the big house tonight and then move and downsize into this little house. Can I say it one more time and then it's at our age is this an appropriate risk to take? Denied. There was the next question. Now, Leslie listen to me, if you wanted to sell your home right now, which would be pretty smart to do if you ask me take that money by this house outright and downsize right now and decrease your expenses right now. Maybe pay off some of that debt right and pay off, you know, your student loan debt, your $5,000 of credit cards, whatever it may be. I don't have a problem with that. If that was your plan, but to keep both. Absolutely not. You do not have the money to do so plus you don't have where you're going to get the down payment. It's $7,500 in savings. You're grossing $60,000 now. This is too much risk for you to take on. Why are you waiting for 10 years to downsize? Why are you doing that or for one of them to pass? You might want to, you know, find out that you could actually make more money downsizing now, not even take in as much income and still be ahead of the game because your expenses are so much less. Just something to think about. But bottom line denied. Okay, you can all tune into the today show on September 15th at 10 o'clock East Coast time or adjust that wherever you are and um yeah, there we go. To see if I deny or approve you, go on. All right. Next question is from Gina. I love this question, Suze. It says, hi Suze KT and team, thanks for all. What team? our team Roberts, our team. Okay, thanks for all the resources you provide to your fans. I'm in my mid-thirties and in a six-year relationship to a man in his early forties, he works in Hollywood as a backslash. Already know where this is going ready. He's a writer, Actor, director, producer, this is going, this translates to someone who does not have a guaranteed or stable income. But spends like he does, wait a minute. Good thing. He is fun and charming. Now, just be patient. Let me finish. So, since we've been together, he's worked part time at best. They're not married, are they? No, thank god. And is continuously in $20 or 80,000 of credit card debt, he consistently spends more than he earns. So, wait a minute. He's gone on several trips vacations with the guys in spite of the fact that he's in debt and not pursuing work. Ready for this, we've gone to therapy together after he expressed a lot of anxiety over his financial situation after she was complaining. I think that was the actor side of him, but what ends up happening is that he changes for a month or two, then he feels it's too hard to go back to his old ways. That's the producer side of him. Ready? I deeply strive for stability in my life and what question is the question. I'm a good saver hard worker. She then she goes on to say everything. She's back. I'm wondering how I get through to him. Wait, I have the answer and also, I'm being, am I being unrealistic to think that he will ever change? Yes, you are. What point does a woman give up and just accept things as is. Never Wait. Here's my advice to Gina time to slash the back slash boyfriend. Don't you love that line? Why did you do that? That's my KT's advice. That's really good. That was very clever. Gina, remember how I always say that most people ask a question that they already know the answer to KT answered that for you. I'm surprised actually it's taken you six years to get that. He can't be that much fun and cute and everything like that. You already see it. The writing is on the wall leave now slash, slash it. Seriously? I would so slash it and you're so young, you're so young, you're in your mid-thirties, my goodness. Gina, there's a whole lot of out there in the world, go for a girlfriend. Next question is from Jasmine. My question is regarding my aging in-laws they are, 82 and 81. They live together on an acre property, but have health issues. Everyone in the family takes an active part in taking care of them, and making sure that they get to their doctor appointments and that everything else they need is in place. They're comfortable financially with the house that has been paid off and retirement accounts and pension that more than support their everyday needs. The problem is their accounts are all over the place and mostly not giving the optimal return on their money. Aside from opening the Alliant credit Union accounts, how else can we consolidate their accounts that would still be safe and make them feel secure. Also, Suze, this is a great question. How do you suggest we broach the subject to them about their must have documents? My mother-in-law made me promise not to put her in a nursing home when the time comes, that she could no longer take care of herself. And then this is in all caps bold, everybody, it says, and I would like to keep that promise to her. What would you suggest we do to prepare for when that time comes? She only has two children, my husband and his brother, and they both loved their mother very dearly and would share in taking good care of her. This is such a great question. And so heartfelt because we've all been there. You made a promise. That's a very, very difficult promise to keep, unless there is a significant amount of money to make sure that can happen. Let me tell you why. You want your Mama to live at home with you and she wants to live at home with you as well. And now as time goes on, she's needing more and more help. She needs somebody to pick her up and transport her to feed her to change her to do everything. You cannot leave her alone for one second. So, you need to go to the store, you need to pick something up. You have to take your mother with you or somebody has to be there. The problem is you can have full time help. But then what happens if that help doesn't show up that day, which happens more than you have any idea. So, what I would suggest is this they're having health issues, why not sell the property right here and right now that they live in and move them both to an independent living facility. That's exactly what happened with KT's parents, my mother, where there's a beautiful apartment, they get to live there. They're living their life. They're making new friends and things happen when you have an elderly parent at home. I know my parents did it with their parents. I mean just things went on. We tried to do it really with my mother couldn't even happen that way. So, here's the key to go into an independent living facility. You have to show that you can be independent, that you're not ill. You can do all the activities of daily living that you're really, that you really can be independent. So now they're going into this place that they're enjoying, that they're independent. And if something does happen than either help can be brought in within that facility or many of these places have other levels of care, which also is the assisted level of care, the skill level of care. But your mother, I was calling her your mother. I get that she's your mother-in-law, but I'm just going to call her your mother. I just like that better. Right? So that, but that with, you know, your mother, once she gets used to being in that place, especially with your father, it will be so much easier on her if your father dies first and easier on him if she dies first, it's there already in their home and they don't have to move. So, it's not like there's two losses, the losses of their love of their life and the loss of the house that they were living in. So, downsize now and look into that and I'm telling you, it will be so much easier on you. I can't even begin to tell you. Right and probably happier for them in the long run, absolutely. They make new friends. Yeah, they have their own community. Would want to go over and we could say can we come over tonight Mom? Busy, busy doing what? Oh, we have a concert with this. We have that anyway. Okay, there you go. Suze. Let me ask you a question. What if anything happened to me, would you want to go to a really great assisted living facility? Like some new ones that they're being built? See. Can you just do the next question. Next question. Don't make me think about that. All right. This one's by more seriously KT, I probably would get a boat that had a lot of people to take care of me if I were at that stage and I would just say sail around the world do something. So, I could just stare out and see if I could see you swimming up there somewhere. All right, next question is from Marlena. Dear, Susan KT. I'm confused as to how my husband and I should take title to our home and rental property. Both properties are in California. Currently the title to our home, which is a condo is community property and our rental condo is JTWROS. What does that mean KT? I have no idea. Quizzie. I am uncertain which title is best in our situation. I believe that I should have the title to both properties and community property due to the step-up basis. Am I correct? We're currently refinancing both properties and in the process of completing our must have documents. Since we will be transferring the title to our living trust, is it best to make the title changes before closing our refi? Confused Marlena. So, first of all, whenever you're about to refinance or finance a piece of property that you are purchasing or refinancing.First, just do it in your individual name. Because some banks are just wonky and they don't want to finance or refinance something that's in trust, after it's in your individual name, you have gotten your financing and everything, then transfer it into the title of the trust. So, there's that answer. Now, obviously, KT, you do to know what joint tenancy with right of survivorship is. That's what those initials are. Joint tenancy, JTWROS. So, there are many ways one can take title. If you take it with joint tenancy with right of survivorship, then the two of you own property. You don't have to be married, it can just be any two people can own the property and upon the death of one, the surviving joint tenant automatically gets your half of that property goes immediately to him or her. No probate, nothing, done. Another way one can hold property, but that's only true if you live in a community property state and the other way you can own it is community property with right of survivorship. The difference between the two, is that if you own property and joint tenancy with right of survivorship, you and somebody else. You bought the property for $300,000, you each have $150,000 cost basis on that property. One of you dies, the other inherits, your half the new half. You get a step-up in basis on their half. So, if the property now is worth $400,000, there half is worth $200,000. So, on their half you get $200,000, you still have your half, which is $150,000. So, your cost basis in this home is $350,000. If you owned it in community property with right of survivorship, you get a step-up in cost basis on both halves at the death of one of you. What does that mean? So, we buy KT a piece of property let's say when we lived in California, and we did do this by the way and we owned it in community property with right of survivorship. Let's just say this property was worth $1 million. Say that's true. $500,000 was yours, cost basis 500,000 mine. You die, this house is now worth rather than one million. It is now worth $9 million. It's possible. Okay. Yeah. Normally in joint tenancy with right of survivorship, your half would be worth $4.5 million, my half is still only worth 500,000 because I didn't die, in community property when you die, I get your half at 4.5 million and I get my half reevaluated to 4.5 million. My new cost basis on this property is $9 million dollars if that's what it's worth. So, when I turn around and I sell it and I sold it for $9 million, I wouldn't have to pay any income tax on it, wow. That's why yes, rental property wherever you live. If it's a community property state, you should own all your real estate if you are married and you own it with your spouse community property with right of survivorship. Wow, that's great to know. Okay, next question. This is somewhat similar. Well, this isn't similar but it's also about real estate and a living trust. This is from Pamela. So, Pam says I'm 60 years old and I'm a divorced woman. I have two grown daughters and four grandchildren. I live in the state of Indiana. This year I was diagnosed with breast cancer and decided it was time to update all of my documents. I met with my attorney and updated my will and asked about a living trust. She advised me that because I set up all my assets to transfer upon death to my heirs. I do not need a living trust. So, what are your thoughts on this Suze? So, upsetting. It's not even funny Pamela, I want you to listen to me. It's true. You could have your bank accounts, you could have your piece of real estate, everything you want. You can have it set up with transfer on death and it would absolutely avoid probate. And it would go to whoever it is that you want to leave those assets to. So fine, you now listen to this attorney and a year goes by or two years goes by or two and now you have a massive stroke and now you cannot really speak anymore. You really can't communicate. You can't recognize anybody. And now you need access to the money, your house now needs to be sold. Oh, money needs to be taken out of your bank account to pay for a nurse or whatever. Can those where it's transfer on death or pay on death upon your death. They get all this. Can they do anything? Oh no, they can't. Because you're not dead, when you do the must have documents. Yes, you also avoid probate in all of that. But these must have documents, especially in the revocable living trust has an incapacity clause. And what that clause says is that if I become incapacitated, KT can sign for me. If KT becomes incapacitated, I can sign for her. If both of us become incapacitated, then X Y and Z can sign for us. So, we've taken care of that and that can happen more often than you think. So, once you've died and I've said this before. All right, you don't have to see the mess that's left behind on any level, if you didn't set things up correctly. But when you don't want to see that is while you're alive and it affects you. So, you might just go back to your attorney and you might just simply say. But what if this happens? What if that happens? A good attorney would have known that. So, Suze? Where's my quizzie? Oh, you want a quizzie. Yeah. Oh, we're too, we don't have enough time. That's why I'm looking at, she has a quizzie in her hand. But she won't do it because we're way over time. So, until Sunday tuning. Are you happy that you don't have a quizzie? I'm real, happy you would have gotten this one. So right, I can tell you not to hold it. Maybe we'll do it Sunday. But until then everybody ready? I'm gonna do an oldie, goldie. We're going to take it out, Suze. Don't you want to say one more happy birthday. Wishing the girl's birthday to be wonderful, Katie, Lauren have a great day, girls love each other up and have fun. Save me a piece of that pie. Ready, people first, you're going back to my old. Is this how you want me to take it out from now? People first, then. No, here's how it goes. Ready. KT, now until next time, there's only one thing that I want you to remember and it's this: people first, then money, then things. Now you stay safe. See you Sunday, everybody. Bye, bye.
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